Source: Daimler (2015a)
With their product and service portfolio, the Daimler AG belongs to the automotive industry. As part of this industry, the Daimler AG faces the challenges of price competition and commoditization that have been identified in chapter II.2. „Growth is not possible in the traditional markets, since these markets are saturated“ (HK A8). To overcome the vicious circle of price competition and commoditization, European premium car manufacturers need to differentiate themselves and discover new business opportunities for overcoming the stagnating demand.
VI.2 Daimler’s digital services
To discover new business opportunities, the Daimler AG claims the strategic focus areas “leading in technology” and “pushing digitalization” (Daimler, 2015b). The Daimler AG focuses on technological development, since „digital trends are altering products and services, the communication with customers and the manner in which the Daimler AG creates value“ (ibid.).
Daimler’s enhances connectivity services, develops customer-focused services and improves the customer communication. This translates in “car-to-x communication, the Mercedes me service brand and our Moovel mobility concept, which are helping us to meet the changing demands of our customers and enabling us to enter new markets” (Daimler, 2015a). For analyzing, how digital trends are changing Daimler’s business model, the digital services are outlined in the following.
Car-to-x communication
Car-to-x communication represents the continual dialogue between vehicles, passengers and the surrounding environment (Daimler, 2015a). Mercedes-Benz understands this kind of connectivity as ‘enabling technology’ for the areas of infotainment, electronic vehicles, safety, and autonomous driving.
Mercedes-Benz Cars and Daimler Trucks are very ambitioned in the rollout of connected vehicles and the increasing of digital services (Daimler, 2016). For instance, the new Mercedes-Benz E-Class is the world’s first series-built vehicle that shares information with other cars and with the infrastructure (A 11).
Daimler Trucks wants to pioneer connectivity and autonomous driving in the segment of trucks.
Dieter Zetsche – the CEO of Daimler – stated that Mercedes-Benz is going to demonstrate their technological leadership at the next IAA Commercial Vehicles Show with the Mercedes-Benz Future Truck 2025 (Daimler, 2016). This study demonstrates how connected driving will revolutionize goods transport, which leads to better drivers, vehicles and logistics management.
An important area of car-to-x communication is the field of autonomous driving, which is described as one of the biggest innovations since the invention of the automobile (Daimler, 2015a).
Mercedes-Benz wants to make autonomous driving a reality. Their customers are already using autonomous features today in Mercedes-Benz cars.
Mercedes me
Daimler has the vision that the intelligence of a Mercedes-Benz should not end when the driver leaves the vehicle (Daimler, 2015a). Therefore, Mercedes me is about connecting with customers digitally to guarantee an ongoing relationship between the driver and his vehicle through digital
services. The focus is on the personal lifestyle and mobility needs of each user - regardless whether they drive a Mercedes-Benz, use car2go, Mercedes-Benz Rent, or Moovel, or own a vehicle from a non-Group brand.
Mercedes me allows Daimler to address people on the Internet and in the real world. Users can decide for themselves which Mercedes me services they want to take advantage of, and when and where. This could be at home on the couch via tablet computer, on vacation using a smartphone or at Mercedes me stores.
Mercedes me is designed as a web portal, which brings together all existing and future services.
Five pillars outline the portfolio of different services. The connect pillar includes all connectivity topics; the assist me topics are about after sales services; finance me includes the leasing and financing of cars; move me includes everything related to mobility services; inspire me includes sub portals like She’s Mercedes to increase customer loyalty. Daimler admits that the Mercedes me service brand is still in the early stages, but the digital concept will be continuously expanded with new features (AG A5).
Mobility services
The portfolio of Daimler financial services includes mobility services such as the Moovel mobility platform and the car2go car sharing service.
Moovel is a platform to utilize the opportunities on the interface between mobility and mobile Internet. The free available Moovel smartphone application allows users to compare the travel times and costs for various modes of transport and to select an optimal route for their trip. Using the app, it is possible not only to compare various mobility options, but also to book them and pay for them. Moovel‘s partners are car2go, Flinkster, mytaxi, Taxi-Ruf, Mietfahrräder, public transport operators and Deutsche Bahn (German Railways). With the full integration of online tickets, Moovel is the first provider to offer a genuine one-stop shop for urban mobility. The Moovel mobility service already has more than one million customers and wants to become one of the big players in the market for mobility services (TH A7).
Car2go is a free-floating car-sharing concept, which means that the cars can be rented and parked at any place within the defined rental area. This is different from stationary car sharing concepts, since it allows one-way rentals so that the customer can rent the car, drive to his destination and park the car without any further obligations (AS A6). The car2go customer uses his smartphones as the central interface for finding and booking a vehicle, unlocking and locking it, and paying for it.
Car2go operates with cars of the Smart brand, since they are convenient in urban areas (AS A6).
VI.3 Considerations on the selection and relevance of the case study
So far, car manufacturers have responded to the increasing industry pressure by expanding their product portfolios through creating more and more derivatives (Mohr et. al., 2013). This production-oriented strategy was successful and delivered profitable growth. However, car manufacturers are increasingly challenged to establish profitable market niches, since the industry maturity leads to increasing price competition and commoditization. In this regard, car manufacturers need to look for market opportunities to establish new sources of growth (ibid.).
In this regard, networked and automated technology services are relevant for the automotive industry (HK A8). The outlined digital services of the Daimler AG represent opportunities to overcome challenges of an industry in advanced maturity. The technological trend towards an increased delivery of services could become a source for future profits. In addition, the providing of additional services could differentiate Daimler from industry competitors.
The digitalization of automobiles creates new business use cases and new solutions systems to satisfy customer needs (CB A2). To benefit of these new mobility use cases, Daimler’s mission is to shape the future of mobility in a safe and sustainable manner with outstanding services.
However, the digital services need to translate into a business model with the potential to establish a sustainable competitive advantage. Otherwise the threats of advanced maturity in the automotive industry cannot be compensated.